Cross-border derivatives trades to adopt "equivalency approach"

MAS believes this will solve requirement issues involving multiple jurisdictions.

The Monetary Authority of Singapore noted that some traders had concerns that cross-border trades may attract potentially overlapping or conflicting requirements across multiple jurisdictions. The feedback was obtained after MAS requested feedback on the proposals to amend the Securities and Futures Act to better regulate over-the-counter derivatives transactions.

"To address such concerns, MAS proposes an equivalency approach. When a counterparty in Singapore enters into a derivatives contract with a foreign counterparty located in a jurisdiction that offers equivalent safeguards, in MAS’ assessment, the Singapore counterparty will satisfy MAS’ clearing and reporting obligation if it fulfils the requirements in the foreign jurisdiction," says MAS.

"There were other suggestions on conducting periodic  reviews on the clearing and reporting obligations and relevant thresholds to take into account changing market conditions. MAS agrees that such reviews are important to ensure that the clearing and reporting obligations reduces systemic risk and enhances market transparency," it adds.